Wonder Home Finance commences operations with 29 branches across Rajasthan.

With 29 branches spread across the big cities and small towns of Rajasthan, Wonder Home Finance Limited has announced its entry into India’s booming retail housing finance business. Wonder Home Finance is a part of RK Group, Rajasthan and India’s well-known business groups. From RK Marble to Wonder Cement and now Wonder Home Finance, RK Group is committed to holistic and transparent business practices. The vision and dedication of its promoters and employees had led to patronage amongst its consumers and business partners. Wonder Home Finance Limited has received final approval from the National Housing Bank to commence its business.

As a part of the first phase of roll-out, Wonder Home Finance will focus on its lending business across the length and breadth of Rajasthan. Currently, the company has 9 branches in Jaipur, Jodhpur, Bikaner, Udaipur, Chittorgarh and Rajsamand region and is in a process to set up 20 more branches across the state of Rajasthan by the end of August 2018. The branch spread will cover almost 70% of service area in Rajasthan state.

Wonder Home Finance will give financial assistance in the range of Rs 5 lakhs to Rs 35 lakhs to the people from lower and middle income strata of the society. The interest for home loans, repair and renovation of homes and construction of homes will be in the range of 11% to 14% with the tenure of 3 years to 20 years. With the focus of last-mile financial inclusion, the facility of home loans can be also availed on Gram Panchayat Properties and for the development of Non-Agriculture land.

In a boost to small businesses and proprietorship, Wonder Home Finance will offer financing at attractive interests. The loan amount ranges from Rs 5 lakhs to Rs 20 lakhs with the maximum loan tenure period of 15 years.

The lending by Wonder Home Finance is envisioned with PM Modi’s vision of ‘Housing for All by 2022’. The Pradhan Mantri Awas Yojana is an initiative by Government of India in which affordable housing will be provided to the poor with a target of building 20 million affordable homes. The scheme also includes an attractive credit linked subsidy on loan interest which aims to help PMAY beneficiaries from lower and middle income group. As per National Housing Bank, beneficiaries from lower and middle income group would be eligible for the interest subsidy at the rate of 6.5% for loan amount upto Rs 6 lakh, 4% for loan upto Rs 9 lakhs and 3% for the loan amount upto Rs 12 lakh. Wonder Home Finance Limited has signed a MoU with National Housing Bank keeping in mind the mission of Pradhan Mantri Awas Yojana which allows beneficiaries to apply for Credit linked subsidy scheme.

“With the launch of Wonder Home Finance Limited, we are confident that we will be able to deliver unified financial services to the people of this country. Our people centric business model and service oriented delivery mechanism will help to create an exceptional experience amongst our target audience. It will further enhance the groups philosophy of perfection and reaching to masses. Also envisaged by our Government’s vision of ‘Housing for all by 2022’, it is a step towards delivering last mile financial services to the people of this country. We are confident of this business proposition which is a unique one in the industry today and it will surely help us to drive the group’s growth to the next level.” - Shri Ashok Patni, Chairman, RK Group.

Wonder Home Finance uses easy, transparent and customer friendly loan processes. The company claims to offer home and business loans with the fastest decision time of 3 days. Convenience and use of technology are among the core values as customers can avail easy financing through the website, mobile app and door step service.

In order to take its financial services business to the highest level, Wonder Home Finance Limited will target to leverage the pedigree and network built by the RK Group. With its Pan-India license, the company plans to expand operations in Gujarat, Madhya Pradesh and Maharashtra in FY 2018-19. The company is confident of building a powerful brand ‘Wonder Home Finance’, which would become a synonym to housing finance segment in the near future.

- Chaitanya Kulkarni

#MarketWatch: What next for Manpasand Beverages?

Over the last few weeks, the Indian stock market has been hit with several shocks. The large caps were affected by rising crude and currency prices. The tumble in the small cap and mid-cap were led by the investor confusion in few selective stocks like Vakrangee, Inox Wind and Manpasand Beverages. Manpasand Beverages through its corporate disclosure declared the announcement of resignation of its statutory auditors M/S Deloitte Haskin & Sells, Vadodara. On the subsequent day, the Board of Directors of Manpasand Beverages appointed M/s Mehra Goel and Co., as their statutory auditor for the year. The newly appointed accounting firm has 13 partners on-board with an operational experience of sixty five years.

Although, there have been many cases of resigning auditors in the recent past. Several misinformed presumptions were disseminated through mainstream and social media which affected investor sentiments at large. Most of them are unsubstantiated rumours that are not based on any factual evidence and a lot of shareholders and investors have been negatively impacted. In fact, according to Prime Database, between January and May 2018, 32 auditors have resigned midterm, while for 2017-18 the number of exits stood at 36. 

Investors should be aware that Deloitte was auditing the financial results of Manpasand Beverages for the last 8 years and had never expressed their concerns on the financial performance of the company. Further, there has been no instance till date where the company has denied disclosure of any financial information. This rumour ride has affected the stocks of the company. Although the investors should prefer official sources of information than media agencies for further investment opportunities.

Manpasand Beverages has been one of the fastest growing listed FMCG companies. The company reported staggering 43.8% rise in net profit of Rs 72.6 crores for the financial year end of 2017. The total income for the same year stood at Rs. 735 crores. For Q3 2017-18, India’s leading fruit drink player, Manpasand Beverages, reported a growth of 64% rise in net profit at Rs 11.9 crores against net profit of Rs 7.2 on Year on Year. 

A 2016 report by Mintel on the global juice market indicates that in India too, packaged juice is likely to grow by taking a share from fresh-squeezed juice and moving into small cities and more rural areas, similar to what is observed globally.

“In India, for example, local fruit juice manufacturer Manpasand Beverages found success focusing on semi-urban and rural markets, where growth is fuelled by rising disposable incomes and a void left by bigger brands that have largely stuck to urban centers,” the Mintel report states. 

Manpasand's healthy market position in the fruit drink segment is underpinned by presence of brand Mango Sip and Fruits Up. The company has made several innovations in the past couple of years, which have enabled it to enter in top 5 players in the mango-based drinks market. In fiscal 2014, it launched the Fruits up brand in the carbonated drink market. The brand grew 71.30% over the past three fiscals and contributed 25% to the company's revenue in fiscal 2017. With network of 4000 distributors across the country and strong presence in Western and northern parts of India, revenue increased significantly over five fiscal through 2017.

The company already has 5 manufacturing units spread in Vadodara, Varanasi and Ambala. Manpasand Beverages plans capex of Rs 600 crores to increase manufacturing capacity with plants at Sri City, Vadodara, Varanasi, and in Khurda, Odisha. The ground-breaking ceremony of upcoming Khurda plant was commenced in the august presence of CM of Odisha, Shri Naveen Patnaik. These four new plants are sure to double the company’s production capacity in the coming months. This shall also help the brand to reach newer markets as the production facilities increase. Manpasand Beverages also plans to enter into new beverage verticals in near future.

What market investors want? Stable outlook, prospective growth and a laborious past for a glorious future. Manpasand Beverages Limited was set up as a proprietorship firm named Manpasand Agro Foods in 1996 in Vadodara, and was reconstituted as a private limited company in fiscal year 2012 and public limited company in fiscal year 2014. Since then it has been expanding its market portfolio. 

Manpasand’s flagship brand, Mango Sip is growing by leaps and bounds and is expected to grow at a CAGR of 33.1% to Rs 1,408 crore by FY20. The recent backlash against carbonated cola drinks especially in the south and the upcoming Sricity facility will help Manpasand acquire southern markets. The Indian Juice market is expected to register compounded annual growth rates (CAGR) of 8% by 2022 to cross Rs. 17,500 crore compared to around Rs. 12,040 crore at present, according to Euromonitor International. The report states that the regional players and start-ups are currently challenging present market leaders by introducing new healthy lines of juices. Over the forecast period, these companies are expected to increase their production capacity and distribution networks to ensure year-round availability, which is likely to affect the current competitive landscape of juice in India.

The Euromonitor International report states that Coca Cola, Parle Agro, PepsiCo and Dabur together account for the vast bulk of juice sales primarily due to their successful portfolios of mango-based drinks. However, companies like Manpasand Beverages and Hector Beverages are quickly gaining market share since the last couple of years. Also, a Motilal Oswal report published in May 2018 suggested that Manpasand Beverages Limited shall see continuous growth in the coming years and would positively impact in its stock value.

Much of the ambiguity around Manpasand Beverages was to do with the fact that the company had not shared a schedule for its Meeting of the Board of Directors of the Company. However, now that the company has informed the bourses that it would convene a board meeting on June 27 to consider and approve audited financial results for Q4 FY2017-18. Soon, after this corporate announcement, the shares of Manpasand Beverages saw an upward trend since the third week of June; further validating the growing positivity about this company in the investor community.

Disclaimer – We have provided all information based on our research and we do not have any holding. Please consult your financial advisor before making any investment decision.

- Chaitanya Kulkarni.

Dubai's Relam Investment pumps $250- 300 million in India.

Relam Investment LLC, a new international joint venture formed by UAE-based Vault Investment and Vietnamese MIG Holding officially made entry into Indian markets. The company, headquartered in Dubai is set to focus on investments across multiple sectors including real estate, technology, energy, oil & gas, trading, healthcare, F&B, retail and agriculture. The company looks to invest USD 250-300 million in the Indian market with an initial focus on real estate and technology.

The company announced two new technology-led investment projects. The first would serve the real estate sector through the crowdfunding platform and the second, a trade hub platform, which will move small and medium enterprises into a different paradigm. Relam Investment LLC has allocated an investment portfolio of $50million to fund companies innovating in emerging technology like blockchain, AI, Big Data and another $200 million into the real estate sector, where India stands as one of its main hubs.

Relam Investment LLC also signed a cooperation agreement with RRP S4E Innovation Pvt. Ltd in order to set up renewable energy plants using CIGS, one of the most cutting-edge Nanotechnologies in the renewable domain. The partnership will also lead to setting up of a unique Electro-Optics park, as a part of its programme.

“The partnership between the two companies will bring together proven expertise into multiple sectors, which we aim to replicate in the Indian market. Our strategy is aligned with Dubai’s vision for globalized growth via effective investments. India is a developing region and its ‘Made in India’ project has made the country a global hub for investments. Through Relam Investment LLC, we aim to give a boost to the Indian start-up ecosystem.” - Sultan Ali Rashed Lootah, Chairman & MD, Relam Investment LLC.

Apart from India, Relam Investment LLC will focus its operations in the UAE, Vietnam, GCC countries, United Kingdom, Turkey, South East Asia and Egypt in the initial years, before expanding to other countries and regions around the world.

Source - Press Release.

India to have 50 crore mobile internet users in 2018

478 million mobile internet users in India by June 2018: IAMAI

Like food, garments, and shelter, the internet connectivity for e-governance and information has been the 21st century’s basic human need. Cut-throat competition between telcos like Jio, Airtel and Idea has benefitted mobile internet penetration at large. Some telcos going ahead announcing that India’s 99% villages will get 4G internet connectivity by Diwali 2018. This isn’t a mere announcement as Open Signal report suggests that India’s mobile internet penetration may be far ahead than the US and developed countries in Europe. Although India ranks amazingly good (much better than its competitors) at last-mile internet connectivity, but we still suffer from low and inconsistent speeds.

The Internet and Mobile Association of India and Kantar-IMRB report points that India may have 478 million mobile internet users by June 2018. According to the report, the number of mobile internet users increased by 17.22% from December 2016 to reach 456 million users by December 2017. Urban India witnessed an estimated 18.64% Y-o-Y rise, while Rural India witnessed an estimated growth of 15.03% during the same period. With 59% penetration, Urban India is expected to show a slowdown, while Rural India with only 18% mobile internet penetration is clearly the next area of growth.

Young students are the most prolific users of most services. Middle-aged and older men show the greater propensity of using social networking and browsing; with old men having lower habits of audio/video streaming. Working women have the highest propensity for social networking and browsing, while non-working women have the highest propensity for text chatting. The report further finds that Mobile Internet is predominantly used by youngsters, with 46% of Urban users and 57% of Rural users being under the age of 25. Urban India has around twice the proportion of users over the age of 45, while the age range of 25 to 44 has almost equal distribution of users in Urban and Rural Areas.

Data is the new oil.

Since the launch of Jio, the affordability aspect of mobile internet services has been benefitting consumers at large. 4G internet can be obtained at just Rs 5 per day if chosen for a three-month plan. Expenditure on Voice has been steadily decreasing from 2013; and with the popularity of VOIP and video chatting, the expenditure on voice services has decreased drastically in recent times. This in turn means that there is a rise in proportion of Data expenditure in comparison to Voice expenditures for most users. In just 5 years from 2013 to 2017, the ratio of Data:Voice went from 45:55 to 84:16.

Telecom companies now not just offer data. They have also ventured into video content, music streaming and online news portals. The latest example of business diversification is JioMusic, which merged into Saavn to create $1 billion dollar entity.

Going forward, NTP 2018 with focus on new technologies like 5G is expected to promote better quality data services at more affordable prices and can be expected to help address the digital divides and promote internet penetration in the rural areas via mobile internet.

– Chaitanya Kulkarni

Source – IAMAI

Only 1.7% of India’s population pays income tax

Ministry of Finance has revealed that only 2.06 crore people paid income tax in year 2015-16.

Are we that poor? It’s hard to digest these facts that hardly 2 out of  120 people pay income tax to the government in the AY 2015-16. The data further revealed that just over 3 per cent of the 120 crore Indian population filed their tax returns.

While the number of income-tax return filers rose to 4.07 crore in the assessment year 2015-16 (FY 2014-2015) from 3.65 crore in the previous year, only 2.06 crore actually paid their tax as the others claimed income below taxable limits.

Last year, 3.65 crore who filed returns out of which 1.91 crore had paid income tax.

According to the official figures, the maximum amount of 19,931 crore was collected from 2.80 crore tax filers who paid between Rs. 5.5 lakh to Rs. 9.5 lakh in taxes. Data shows that as many as 1.84 crore returns were filed for payment of income tax of less than Rs. 1.5 lakh or an average of Rs 24,000.

Out of the total 4.07 crore tax returns field in AY 2015-16, nearly to 82 lakh declared their income as zero or income less than Rs. 2.5 lakh. Currently, no income tax is levied on income up to Rs 2.5 lakh.

It’s time to say goodbye to the income tax

The total amount of income tax paid by individuals this year has declined to Rs. 1.88 lakh crore in AY 2015-16 from Rs. 1.91 lakh crore in AY 2014-15. The government should positively think of repealing income tax up to Rs 10 lakh rupees.  To manage the fiscal consolidation, we could cancel religious, gas, education subsidies on the basis of PAN/Aadhaar income.

The most striking fact is that only 5 Indians reported income of more than 100 crores; 11 Indians reported income Rs 50 to Rs 100 crores and just 58 Indians declared income between Rs 25 to Rs 50 crores. Then who are owns those Rolls Royce, Lamborghinis and Mercs? In South Mumbai, one of India’s hot properties, rates for 3 BHK sky bungalows range starts from Rs 10 crores. We also here movie actors earning Rs. 100 from a film. As the numbers don’t add up, there is certainly something fishy. It would be advisable to repeal the income tax system to benefit at large of a middle-class population. The decision would boost Ease of Doing Business for MSMEs. Let’s wait what Mr.Jaitley has got to deliver in his ‘last’ full-fledged budget.

Indian electronic manufacturers to get competitive edge from the hike in import duty.

The Government of India’s decision to hike duty on the import of electronic goods would boost #MakeInIndia.

The notification issued by Ministry of Finance announced the raise in custom duties on a host of electronic goods in order to give a push to Make in India initiative. As per the notification, the customs duty on products like Television sets, mobiles, microwaves, refrigerators and many others have been increased.

The customs duty on television set has been increased to 20% from 10%, while the additional duty on assembled LED panels (modules) has also been increased from nil to 7.5%. Similarly, the duty on monitors and projectors has been doubled to 20%, while for the mobile handsets the duty has been raised to 15%. The move has been cherished by electronic manufacturing and Original Equipment Manufacturers (OEMs) who Make in India. This would mean that the electronic product manufactured in India would relatively cost less than its equivalent produced abroad.

Global electronic brands, in a hope to increase revenue, were eyeing India’s booming $100 billion electronics market. The electronics market of India is one of the largest in the world and is anticipated to reach US$ 400 billion in 2022. The market is projected to grow at a compound annual growth rate (CAGR) of 24.4 per cent during 2012-2020. The hike in import duty would encourage global electronics manufacturers to set up plants in India.

#MakeInIndia, for Indians and ship it anywhere in the world – PM Modi

With local sourcing of electronic goods, India could narrow the gap between India’s export and import. As per data published by NITI Aayog, in the period of 2014-15, India imported electronic good worth $36.9 billion while its export was minimal at just $6 billion. In several countries, the contribution of the electronics industry to the GDP is significantly high. For example, the electronic industry contributes 15.5% to GDP in Taiwan, 15.1% in South Korea and 12.7% in China. But in India, this proportion is only 1.7%. As India awakes, the scenario in electronics manufacturing would see a transformational shift.

The notification of increasing import duty gives protection to the brands who manufacture here in India from low-cost OEMs products which are often dumped in price-sensitive Indian market by Chinese brands. With the commitment to Make in India, reputed International electronic brands are keen to set up large Electronic Manufacturing Clusters. iPhone maker Foxconn has agreed to set up a manufacturing plant at India’s largest electronics SEZ at JNPT Coastal Economic Zone near Mumbai.

Local sourcing and manufacturing of electronic products would usher higher profits for MSME as well large-scale manufacturers. The government also expects higher revenues from hiked import duties by the end of the year. Experts who have worked in electronics segment say that hike in import duty would lead to inflationary pricing, however Indian Manufacturers will benefit.

This protectionary measure by the government of India would strengthen Made-In-India brands. The electronics manufacturing industry has a potential to give 10 million jobs per year.

"I would like to congratulate Government on the decision to raise customs duty on some electronic items including television, mobile phone, and water heater. This move will definitely give a boost to Manufacturing in India which will in-turn push Make in India initiative by our Government. It will encourage foreign players to manufacture products in India rather than import them as the prices are expected to go up, especially for televisions. With this move, Indian manufacturers who make products with complete backward integration will benefit immensely. Manufacturers such as Videocon, one of the leading Indian manufacturer with a large workforce will get a boost as they have a very strong manufacturing base in the country. Even smaller manufacturers like Vierra will be benefitted from this step. Overall it is a great step to boost manufacturing in the country and will also lead to job generation. Make in India project by our government is a great project and to make it successful the government has started implementing the right environmental requirement.” said Mr. K.S. Raman, Former President, Consumer Electronics & Appliances Manufacturing Association (CEAMA).

The growing customer base and the increased penetration in the consumer durables segment has provided excellent scope for the growth of the Indian electronics sector. Soon, India will not just be a market for others, but it will reposition itself as the next factory of the world.

- Chaitanya Kulkarni

Give your data the security it deserves

As per Global Information Security Survey 2016-17 by EY, 33% of Indian companies don’t have any Security Operations Center (SOC) as compared to 44% worldwide. Besides, 44% companies in our country don’t have any or minimum vulnerability identification capability.

India is at risk of cybercrimes and data breaches. And increasingly, the situation is getting worse. Recently, the food delivery app, Zomato, was affected by a major data breach incident, which resulted in the information theft of 7.7 million users. Over the past one year, our country has seen many data breach incidents, including Mirai botnet malware, Petya, and the most infamous, ransomware WannaCry.

Undoubtedly, it will be the job of a CISO to place the enterprise-level security agenda on the company’s priority list, communicate its urgency across organizations, drive various remedial programs, and most importantly, ensure the timely deployment of various security measures.

However, when it comes to cyber security, every employee should be responsible. Awareness is the key. Spreading awareness about enterprise-level security in particular and data security in general help dealing with cybercrimes.

Moving a step ahead, some organizations are promoting this issue on a massive level. For example, the latest campaign of Dell EMC on data security, #DataSuraksha. The campaign is getting enthusiastic participation from professionals across sectors and cities, even from Tier-2 and Tier-3 cities. Some good ideas about data security which I found quite insightful include:

• Don't allow your app to access your phone contact book unless it's absolutely necessary.
• Automate end user backups, with multiversioning, whitelisted apps.
• Don’t allow the Internet Server remember passwords
• Use encryption technology and store data at several storage devices.

Going a step further, Dell EMC is also rewarding such great ideas with fascinating goodies. The campaign has already taken social media by storm to fulfill its objective. To know more about the campaign or participate in it, visit Dell EMC India’s Facebook and Twitter.

It’s time for all of us to do our bit and aim for a cyberthreat-free nation. 

RBI lowers card transaction rate for small businesses.

Digital payments are expected to reach new horizons with good news from India’s Reserve Bank of India. RBI has decided to low Merchant Discount Rate for small and medium businesses in India. Politicians and RBI shifted its goal posts to increase digital payments after the historic decision of demonetisation. It is an imminent fact that large cash transactions in an economy lead to tax evasions. The government is now even considering bringing criminality provision in law for unaccounted large cash transactions.

As a short-term view, Reserve Bank of India has slashed MDR for small businesses to 0.4%. MDR is an acronym for merchant discount rate. It is the commission the bank and the card issuer share among themselves. Thus, if the MDR is 0.5 percent, this amount will be shared between the bank and the card issuer namely VISA, Mastercard, RuPay, AMEX etc.

In recent times, debit card transactions at ‘Point of Sales’ have shown significant growth. With a view to giving further fillip to acceptance of debit card payments for the purchase of goods and services across a wider network of merchants, it has been decided to rationalise the framework for Merchant Discount Rate (MDR) applicable on debit card transactions based on the category of merchants. A differentiated MDR for asset-light acceptance infrastructure and a cap on the absolute amount of MDR per transaction will also be prescribed. The revised MDR aims at achieving the twin objectives of increased usage of debit cards and ensuring sustainability of the business for the entities involved.

Payment products developed by National Payments Corporation of India will have differentiated MDR rates. The UPI and BharatQR have different merchant discount rates (MDR) so it will be a challenge for card networks and the NPCI to sort out where the transaction is originating and charge merchants accordingly. On the UPI, merchants are charged a merchant discount rate (MDR) of 0.25% for payments below Rs 1,000 and 0.65% for all other charges.

According to a press release issued by Reserve Bank of India, revised MDR rate from 1^st January 2018 will be as follows:

• Small merchants (with a turnover up to Rs 20 lakh during the previous financial year) will have to pay a maximum of 0.4% of a transaction on a physical POS or online. This will be capped at Rs 200 per transaction.
• Small merchants who use QR code-based card acceptance infrastructure such as BharatQR will have to pay 0.3% of a transaction. This will be capped at Rs 200 per transaction.
• Other merchants (with a turnover of over Rs 20 lakh during the financial year) will have to pay a maximum of 0.9%. This will have an MDR cap of Rs 1000 per transaction.
• Other merchants who use QR code-based card acceptance infrastructure such as BharatQR will have to pay 0.8% of a transaction. This will be capped at Rs 1000 per transaction.

Digital payments for small businesses will be cheaper at large after the revision in MDR rates. Although, retailers which fall under GST turnover (above Rs. 20,00,000) are unhappy with the move. Government organisations (IRCTC, MCGM, Govt colleges) charge 1% from consumers on debit cards payments. But, private retailers do not charge consumers for Debit card payments.

TheIndianCapitalist.com is of an opinion that we should aim for blanket rates for all merchants from 2019. High rates on POS based payments through cards are justified due to POS machine cost. Payments from BHIM, UPI or BharatQR should be made free for the benefit of retailers and consumers. India would move towards less cash economy if income tax limit is increased to Rs. 5,00,000.

- Chaitanya Kulkarni

India’s government bond ratings upgrade is a result of key economic reforms.

Moody's Investors Service has upgraded the Government of India's local and foreign currency issuer ratings to Baa2 from Baa3 and changed the outlook on the rating to stable from positive. Moody’s is amongst the respected sovereign credit rating agency. India’s sovereign credit rating was last upgraded in January 2004 to Baa3 (from Ba1). In sovereign ratings rationale scale, AAA is considered to be highest rating and C is among the lowest. To put it in simpler terms, here’s a comparative lists of rating scale of few economies from high to low : USA - AAA, France – Aa2, China – A1, Malaysia – A3, Thailand – Baa1, India – Baa2, Russia – BA1, Brazil – BA2, Sri Lank – B1, Cambodia – B2, Pakistan – B3, Iraq – Caa1, Ukraine – Caa2, Venezuela – Caa3, Puerto Rico – C. As per popular rating scale opinion, grade of AAA to Baa3 is considered as investment grade, Ba1 to Caa3 as speculative grade and under that would be considered as default.

India’s rating has been upgraded after a period of 13 years. As per press release issued by Moody’s, the decision to upgrade the ratings is underpinned by Moody's expectation that continued progress on economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term. In the meantime, while India's high debt burden remains a constraint on the country's credit profile, Moody's believes that the reforms put in place have reduced the risk of a sharp increase in debt, even in potential downside scenarios.

Moody's has also raised India's long-term foreign-currency bond ceiling to Baa1 from Baa2, and the long-term foreign-currency bank deposit ceiling to Baa2 from Baa3. The short-term foreign-currency bond ceiling remains unchanged at P-2, and the short-term foreign-currency bank deposit ceiling has been raised to P-2 from P-3. The long-term local currency deposit and bond ceilings remain unchanged at A1.

India’s government bonds rating upgrade is a result of key economic reforms taken by PM Modi’s government. After three years of the NDA government, the government is mid-way through the wide of economic and institutional reforms. Moody’s has hailed recent economic reforms as they aim to bring in transparency and improve the business climate. World Bank CEO at a summit in New Delhi rightly said that no other country as the size of India has jumped 30 places in Ease of Doing Business in the economic history of this world. While many important reforms remain at the design phase, Moody's believes that those implemented to date will advance the government's objective of improving the business climate, enhancing productivity, stimulating foreign and domestic investment, and ultimately fostering strong and sustainable growth. The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness.

Political analysts in India are busy taking a dig at PM Modi for a fall in GDP due to GST implementation and demonetisation. Major rating agencies think otherwise and has given a thumbs-up to Modi’s economic policy and decision making as they think a short-term fall in India’s GDP is a result of policy implementation, not policy paralysis. As per Moody’s, key elements of the reform program include the recently-introduced Goods and Services Tax (GST) which will, among other things, promote productivity by removing barriers to interstate trade; improvements to the monetary policy framework; measures to address the overhang of non-performing loans (NPLs) in the banking system; and measures such as demonetization, the Aadhaar system of biometric accounts and targeted delivery of benefits through the Direct Benefit Transfer (DBT) system intended to reduce informality in the economy.

Most of these measures will take time for their impact to be seen on the GDP growth such as the GST and demonetization. As a result of policy implementation, growth has been undermined in near term. Moody's expects real GDP growth to moderate to 6.7% in the fiscal year ending in March 2018. However, as disruption fades, assisted by recent government measures to support SMEs and exporters with GST compliance, real GDP growth will rise to 7.5% in FY2018, with similarly robust levels of growth from FY2019 onward. Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns. Economists are bullish on India and they expect GDP growth of more than 8% in next few years.

India will spend more than Rs 50 lakh crores on highway developments, ports, metro rail, bullet trains and rural connectivity in five years. India’s debt to GDP ratio stood at 66% but Moody’s has affirmed a stable outlook on India’s spendings. Moody's expects India's debt-to-GDP ratio to rise by about 1 percentage point this fiscal year, to 69%, as nominal GDP growth has slowed following demonetization and the implementation of GST. The debt burden will likely remain broadly stable in the next few years, before falling gradually as nominal GDP growth continues and revenue-broadening and expenditure efficiency-enhancing measures take effect.

Much remains to be done. Challenges with the implementation of the GST, ongoing weakness of private sector investment, slow progress with a resolution of banking sector asset quality issues, and lack of progress with land and labor reforms at the national level highlight still material government effectiveness issues. However, Moody's expects that over time at least some of these issues will be addressed, resulting in a steady further improvement in India's government effectiveness and overall institutional framework.

A rating upgrade for India comes at a time when rating agencies Standard and Poor’s (S&P) and Moody’s have cut China’s sovereign rating. Moody’s cut China’s long-term local and foreign currency issuer ratings to A1 from Aa3 on 24 May on concerns that the country’s financial strength would erode in the coming years. S&P followed by cutting China’s long-term sovereign credit ratings one notch to A+ from AA- on 21 September, holding that its prolonged period of strong credit growth had increased economic and financial risks.

India would need to improve its land and labour reforms significantly to move to next notch. In infrastructure sector alone, companies failed to repay back loans due to stuck land acquisitions. Industries like steel, metal, infra etc are yet to recover from the financial horror of global economic slowdown. Things are improving quickly in India than any other country. This is India’s opportunity to rise back.

- Chaitanya Kulkarni ( TheIndianCapitalist.com, DigiCookies.com, MarineBharat.com )

Source – moodys.com

Coastal Economic Zones will bring port-led prosperity along with high pay jobs.

India wants to shift gears from a service based economy to a manufacturing one. To promote local manufacturing, the government of India rebooted the Make in India scheme. It’s brand ambassadors, the lion and PM Modi were seen worldwide meeting investors and entrepreneurs aiming to improve India’s manufacturing GDP ratio. Processes were simplified and red carpet was laid instead of red tape, pushing India’s Ease Of Doing Business rank by 30 points. No other large country like India has seen such a large jump and with GST, India may soon match with the rank of China.

China’s leap into being ‘the factory of the world’ could be accomplished with its near-coast economic zones. Out of top 10 mega-ports in the world, China has 8 of them and mostly on the east side of the country. Economists say that nearly 75% of China’s GDP growth comes from Eastern cities and economic zones. With economic zones near ports, China could reach out to global markets sooner. Within two decades, China created more than 20 brand new cities with more than 5 million population on China’s east coast. With megacities, came high paying industrial jobs and small medium enterprises.

According to a 2009 Asian Development Bank study, only 10.5% of manufacturing workforce in India was employed in firms larger than 200 workers compared to China’s 51.8% in 2005. At the other extreme, 84% of India’s manufacturing workforce was in firms with less than 50 workers compared to China’s 24.8%. These differences translate into substantially lower average labour productivity and wages in India than China.

Unfortunately, large firms are missing in India in precisely the sectors in which they are needed the most: employment-intensive sectors such as apparel, footwear, electronic and electrical products and host of other light manufactures. These are products in which China has done well thereby generating a large volume of good jobs for its workers. In 2014, the country exported $56 billion worth of footwear compared with $3 billion by India and $782 billion worth of electrical and electronic goods compared with $9 billion by India.

Shenzhen, one of the early coastal economic zones of China is today world’s largest electronic manufacturing hubs. Almost 90% of mobiles which we use today here in India are made in Shenzhen. Oppo, Vivo, OnePlus, Foxconn (Apple & LYF mobile), Samsung have huge manufacturing plants in Shenzhen. The market of mobile parts in so spread that it is almost impossible to make a truly Make In India smartphone. Today, Shenzhen has a population of 11 million and it boasts of gross city product of $265 billion. With an aging population and growing wages, Multinational companies are looking elsewhere in Malaysia, Vietnam or India. Coastal Economic Zones conceptualised under Sagarmala by NITI Aayog and Ministry of Shipping could be India’s greatest turnaround opportunity.

Special Economic Zones nearby Gujarat and Mumbai account to 60% of India’s export. With an aim to provide impetus to Make in India, 14 Coastal Economic Zones are conceptualised under the National Perspective Plan of Sagarmala. The CEZs have been conceptualized as a spatial-economic region which could extend along 300-500 km of coastline and around 200-300 km inland from the coastline. Each CEZ will be an agglomeration of coastal districts within a State.

Leveraging the port eco-system these CEZs will provide the geographical boundary within which port led industrialization will be developed. The CEZs have been envisaged to tap synergies with the planned industrial corridors like Vizag Chennai Industrial Corridor and Delhi Mumbai Industrial Corridor. There is immense scope for logistic cost reduction under Sagarmala and CEZ is an effort to reduce cost by locating the manufacturing centres closer to the ports thereby making Indian trade competitive in the global market.

India’s first coastal economic zone will come up near JNPT Port in Navi Mumbai, a satellite town of a mega-city Mumbai. JNPT CEZ has added the advantage of having two major ports (JNPT Port and Dighi Port) in its vicinity, where JNPT Port could be exclusively used for export the product due to its depth and Dighi Port could be used for the local supply of goods. Another added advantage would be upcoming Navi Mumbai International Airport and Mumbai Transharbour Sea Link. As per the plan, JNPT CEZ will focus on electronic, telecom, automobile and IT goods manufacturing.

As reported in Economic Times, about 45 companies across telecom, auto and IT sectors will soon bid for 200 hectares of land to set up manufacturing units in the zone. JNPT CEZ will provide 1.5 lakh jobs to people staying in Mumbai Metropolitan Region and affected villagers. iPhone maker Foxconn is looking to invest in 13-acre land in JNPT CEZ. Major automobile giants are in talks with the ministry to set up a plant. The entire land distribution will be done under e-tendering process. It’s proximity to Mumbai could also mean realty bonanza on outskirts on JNPT CEZ.

- Chaitanya Kulkarni (twitter.com/chai2kul)

Capital-starved public sector banks get recapitalisation push worth Rs 2,11,000 crores

The cabinet push from Govt of India has given a sigh of relief for capital-starved public sector banks. India’s Minister of Finance, Arun Jaitley announced an allocation of Rs 2,11,000 crore over the period of two years for the recapitalisation of public sector banks. The decision is believed to be in favour of India’s economic interests such as creating jobs and credit creation of Small Scale businesses.

This entails mobilization of capital, with maximum allocation in the current year, to the tune of about Rs. 2,11,000 crores over the next two years, through budgetary provisions of Rs. 18,139 crores, recapitalisation bonds to the tune of Rs. 1,35,000 crore, and the balance through raising of capital by banks from the market while diluting government equity (estimated potential Rs. 58,000 crores). By recapitalising banks through a mix of bonds and cash infusions, the government hopes to avoid breaching its fiscal deficit targets.

After the fall of the economy during 2010 to 2014, Indian banks touched a record NPAs of Rs 8,00,000 crores. Businesses owned by industrialists like Sahara and Mallyas doomed, some even escaping the territory of India to avoid jail time. In addition, Indian banks need to raise capital through Basel III norms up to 11.5% by March 2019. Jaitley’s plan of infusing Rs 70,000 crore was seen as inadequate by banking experts.

With recapitalisation of public sector banks, the intent of the government is pretty clear, to boost MSME lending with industry-specific MUDRA Yojana schemes. There will be a strong push for enabling growth of MSMEs through enhanced access to financing and markets, and a drive to finance MSMEs in 50 clusters. While Ministries concerned will spearhead and provide momentum, banks will undertake speedy processing of loan applications in a hassle-free manner. Fintech companies will be roped in to cut down the appraisal process and generate quality loan applications. MSMEs will be handheld by extending support through:

• Compulsory TReDS (Trade Receivables electronic Discount System) registration by major.
• PSUs within next 90 days, for shortening the cash cycle.
• Sector-specific Mudra financial products, such as Mudra Leather, Mudra Textiles, etc.
• Bank-approved MSME project templates for speedier credit.
• udyamimitra.in portal, so that banks compete for financing MSME projects.
• For registering MSMEs on the GeM (Government electronic Marketplace) portal and e-commerce platforms.

The Rs 2.11 lakh crore is adequate to cover for Basel 3 requirements and support credit offtake after that. There is a good possibility of growth and credit demand in the future. - Rajnish Kumar, Chairman, State Bank of India.

The capital of Rs 2,11,000 crore accounts to almost 80% of recapitalisation requirements. While the government has not detailed the manner in which capital will be allocated within banks, some banks need capital more urgently than others.

Major credit rating agencies considered the bank recapitalisation move as positive. Although, continuous banking reforms are required along with the use of fintech to avoid such bad loan situations in future.

    - Chaitanya Kulkarni

Source – PIB.

In every way, Dell EMC Forum 2017 was a journey to realize transformation, faster.

Keeping pace with competitive pressure and capitalizing on emerging opportunities today demands the fast uptake of digital transformation at the enterprise level. With digital imperative steadily redefining the rules of the game, digital transformation has gone beyond mere a technology initiative to be a part of the business strategy. In view of this changing business as well as technology landscape, this year’s Dell EMC Forum focused on the next step of the transformation journey. More specifically, how we could realize digital transformation, faster.

While preparing to attend the event, I thought to myself how the idea of enterprise-level digital transformation resonated powerfully with the digital India initiative—aimed at bringing transformation to realize. Or in other words, transforming India into a completely digitally powered society as well as the knowledge economy.

At the event, I got a chance to interact with some IT practitioners to understand their perceptions. They explained that the sessions of the Forum would help them solve business problems with a more cohesive approach.  Furthermore, I realized how vigorously each of them was transforming their business to be more dynamic and serviceable to their customer-base.

All these ideas were nicely included in this year's India Dell EMC Forum, at the core of which was the theme "Realize your digital future,” with a clear intent to see how emerging technologies worked reshaping lives and entire industries. The entire forum was divided into several sub-themes, with DIGITAL TRANSFORMATION, MODERN INFRASTRUCTURE: BEST OF BREED PLATFORMS, CLOUD STRATEGY & CONVERGED SYSTEMS, and WORKFORCE TRANSFORMATION being the prominent ones.

Every session revolved around these subjects was not only insightful but also helped me gain a first-hand look at the future of digital transformation. Moreover, I got some real hands-on experience and understanding of industry-leading Dell EMC consulting, Dell's Cloud Client Computing Portfolio, more specifically its Cloud Solutions for Microsoft Azure Stack, Dell PowerEdge Servers, Dell's midrange storage portfolio, just to name a few.

The discussions around 'Workforce Transformation' I found to be very intriguing for larger enterprises who are struggling hard to transform their workforce. It assisted them in understanding how to keep up their workforce with the rate of change. Indeed, it is an important aspect to understand, as the intersection of latest tools, efficient processes, and a dynamic culture is all set to help organizations bring the most out of their workforce.

And there are good reasons too. In 2030, every organization is likely to be a technology organization and as such businesses need to start thinking today about how to future-proof their infrastructure and workforce, according to a report published by Dell Technologies. The report, titled ‘The Next Era of Human-Machine Partnerships’, forecasts that emerging technologies, supported by massive advancements in software, big data, and processing power, would reshape lives. And the society would enter a new phase in its relationship with machines.

Given all things, participating in this year’s Dell EMC Forum was a valuable experience for me.

Originally published on digicookies.com | Tech that transforms life.

BharatQR - The Make in India payment movement

Scan and Pay! Quick Response codes have been in the Indian payments market for more than 3 years but its large scale acceptability was only witnessed post demonetisation.  Scan and Pay is a mobile-based payment facility that enables fund transfer by scanning a QR code using an app which supports this feature. It can be used for making payments at merchant outlets, e-commerce websites and grocery stores, among others. Customers simply need to scan the QR code of the merchant and fill the transaction amount. The amount gets transferred from customers bank account to merchant's bank account in seconds. It eliminates the need of expensive PoS machines and cards. PayTM was the largest beneficiary of cash ban as it had invested Rs. 600 crore of QR code technology. Even road side vendors accepted PayTM as trustworthy and easy to use payment solution.

India has 330 million debit cards holders against 1.5 million PoS machines. To eliminate the mismatch, Visa was the first to introduce mVisa back in 2015. During the demonetisation, Mastercard launched its MasterPay QR code service with RBL Bank. All these initiatives failed that they lacked interoperability. Collaboration is the key element for success in the payments industry. Visa, RuPay, MasterCard and American Express came together to announce BharatQR - a unique and inter-operable QR code standard, that lets merchants accept push payments from their customers.

India has the most sophisticated public payments infrastructure in the world. - Raghuram Rajan, former RBI Governor

BharatQR is the first of its kind initiative in the world where payment providers join hands to simplify the way we pay. No other country in the world has this kind of technology. India is the pioneer in QR code payments technology. We can be a guiding light for other economies in the field of public inclusion in digital payments. BharatQR is cheaper and easy to operate when compared to conventional PoS machines.

BharatQR is an open network solution. If a merchant has a BharatQR code, I can pay the merchant regardless of

• Which issuing bank’s app I am using (e.g. ICICI Pockets, HDFC Payzapp).
• Which card network’s card I have connected to the issuing bank’s app (e.g. Visa/Rupay/Mastercard/Amex).
• Which acquirer has setup the merchant account, and given him his BharatQR.

Currently, 10 issuers, 14 acquirers and 4 card networks have already signed up for BharatQR, and more (around 20) are expected to join in the next month. To use BharatQR, users need to install BHIM app or mobile banking apps of respective nationalised banks. BharatQR will act as a disruptor in payments scene in India but it's not an inclusive solution for 1.2 billion Indians. Feature phones have a penetration of more than 50% in India. Though BHIM works on all feature phones, yet the process to pay is too difficult to understand for first time users. For greater adaptability, payment providers and banks need to launch interoperable and secure solution for all Indians.

Tap and Pay with NFC is a far greater technology than Scan and Pay. Recently, Reliance Jio announced that its JioPhone would come NFC payments feature. Nearly all 4G enabled feature phones in coming months will have this technology. We are here talking about a technology similar to Apple Pay and Samsung Pay but superior due to its zero operational costs and wider acceptability. NFC payment receivers can be installed at trains stations, public buses and stores. India's largest bank, State Bank of India has said that it will install NFC receivers in 1,00,000 PoS machines. Post demonetisation, India is looking to find the perfect payment solution for conventional debit cards. Whether its Scan and Pay, Tap and Pay or Fingerprint banking, we are leading in inclusive payments technology.

- Chaitanya Kulkarni